Consolidating student loans credit score
But So Fi does things a bit differently—our non-traditional underwriting process looks beyond your credit score to take into account factors such as education and career. Most private student loan lenders use FICO credit scores to determine whether to extend credit and at what interest rate. Unfortunately, FICO calculates your credit score is kind of a black box.This allows us to provide competitive interest rates on student loan refinancing. Since FICO is used widely throughout the lending industry, including by mortgage, auto loan, and credit card providers, it gives lenders an apples-to-apples comparison of potential borrowers. While the various factors and weightings used in the calculation are publicly available on FICO’s website, its algorithm is proprietary, which means that no one can predict exactly how a specific financial event will affect your score.For example, a late payment will likely reduce your score, but by how many points is anyone’s guess.That said, there are generally three key ways to improve your credit score: pay bills on time, keep credit card balances low, and reduce the amount of debt you owe. How does a late student loan payment affect my credit score?
In other words, the better your score, the better your rate.
Invest wisely in your education, and those loans should pay off in the form of higher income over time.
But if you mismanage student loan debt, your credit score could suffer—and that could have a big impact on your financial future. Do I need a good credit score to take out a student loan?
When you know you can’t make a payment on time, talk to your lender or loan servicer right away.
Most federal loan lenders and some private lenders offer loan deferment and/or forbearance, allowing you to temporarily suspend payments, which will minimize the impact on your credit score.But remember, there’s absolutely nothing your lender can do to help if you don’t return their calls. Will shopping around for a better student loan interest rate hurt my credit score?